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Green Charter Bank is a U.S. money center bank that wants to speculate on the dollar-yen exchange rate. A yen () costs $0.0087 today.
Green Charter Bank is a U.S. money center bank that wants to speculate on the dollar-yen exchange rate. A yen () costs $0.0087 today. The bank expects it to cost $0.0083 in 8 months. Current annual interest rates are as follows: Currency Yen U.S. dollar Borrowing rate 4.8% 7.4% Lending rate 4.4% 6.5% The bank doesn't want to use any of its own money, but could borrow either $10,000,000 or 1,000,000,000. Assume there are 30 days in every month and 360 days per year. Ignore compounding when working with the interest rates. What is the initial value of the loan after conversion (in S)? What is the value after investing the amount from the previous part for 8 months (in S)? Green Charter Bank is a U.S. money center bank that wants to speculate on the dollar-yen exchange rate. A yen () costs $0.0087 today. The bank expects it to cost $0.0083 in 8 months. Current annual interest rates are as follows: Currency Yen U.S. dollar Borrowing rate 4.8% 7.4% Lending rate 4.4% 6.5% The bank doesn't want to use any of its own money, but could borrow either $10,000,000 or 1,000,000,000. Assume there are 30 days in every month and 360 days per year. Ignore compounding when working with the interest rates. What is the initial value of the loan after conversion (in S)? What is the value after investing the amount from the previous part for 8 months (in S)?
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